Examination of Witnesses (Questions 780
- 788)
MONDAY 10 MAY 2004
DR DAVID
GRANT CBE AND
MR BRIAN
MORGAN
Q780 Julie Morgan: Do you think Finance
Wales is a good use of EU structural funds?
Mr Morgan: I think when it starts
to make those smaller equity investments and plugs the gaps it
will be. It certainly has not been able to make those investments
for whatever reason until now. It has a lot of money now available
from Objective 1 and Objective 2 and has a big pot from Objective
2 and a lot of funding. I think we should give it its head and
say, "yes, we know you are in a risky business; take some
risks".
Q781 Mr Edwards: Mr Morgan, can I
take you back to an issue we discussed when you were an advisor
to this Committee, and that is foreign direct investment. Has
Wales achieved the correct balance between attracting FDI and
supporting indigenous small and medium size enterprises?
Mr Morgan: If we put the FDI position
in perspective, we tended to think that Wales was dominated by
FDI. If you look at the statistics, in terms of ownership, only
about 5% of companies in Wales are owned by overseas groups. That
is less than 5%, so a very small percentage. If you look at the
number of people employed in these companies, it is about 6-7%
of the total employed workforce that is employed in overseas-owned
companies. It is not a huge sector. When you ask, Mr Edwards,
about the balance, we could get a lot more inward investment and
I am sure that we would like to do that. We are not dominated
in any way. Those figures I gave of less than 5% in numbers and
perhaps 6-7% in terms of employment, underestimate the role of
inward investment because they do make a much bigger contribution
to GDP because they are bigger companies that employ larger sections
of the population and produce greater output. Their GDP contribution
is quite big and of course they are very important for innovation.
They bring new ways of management and new skills, new products,
new processes. They are very, very useful to the economy. We need
parity of esteem in terms of the way they are supported by the
public sector. The problem about 10 years ago was that FDI was
just given that much more resource in terms of the way in which
they were feted by the Welsh Office and the WDA at the time, with
so little interest in indigenous companies. You had a situation
where there was a demarcation in the WDA, where the Chairman and
the Chief Executive only dealt with foreign direct investments
and had no real interest in local companies. That has changed
now, so we are getting the balance of esteem and priority in that
sense. We should use our indigenous resources to attract more
inward investment. That is the route we should be going down.
As the Vice Chancellor said, we should be building on success.
Let us look for these successful indigenous companies that are
currently supplying to these multinational companies and say,
"hey, we have got a fantastic supply chain here for new companies;
come and locate in Wales".
Q782 Mr Edwards: Can I ask the Vice
Chancellor about higher education and responsibility. We all know
that higher education in Wales is split between Whitehall and
Cardiff. What assistance do you think the UK Government can give
to create a more prosperous university environment for Wales?
I know this takes us into many debates which you helped us with
on the Higher Education Bill a few weeks ago, but given all that
what do you think the Government can now do?
Dr Grant: I think irrespective
of which government we are talking about, I hope people acknowledge
that we have very much for the future to care about a knowledge
economy. Therefore universities and other educators, but universities
in particular, must be able to develop the next generation of
students who will themselves, both in their social, cultural and
economic impact in Wales, make the big difference. That is really
important. There is without any doubt at all, and it is acknowledged
by many who have analysed it, a big funding gap in higher education.
Some say it is as big as £10 billion. I am not sure whether
that is the right number, but it is a big gap. We have salary
levels that are unattractive, and we have gaps in some skill areas
and some subject areas within universities across the UK. The
first message I have is that irrespective of which government
we are talking about, there is a need for further investment in
higher education. Looking at it from the viewpoint of higher education
within Wales, we have 13 institutions, and I think that that is
too many. Some of them are very small and some of them, as you
are well aware, have quite substantial financial problems, unable
to invest themselves in the future. I would say that investment
is probably the first issue. Part of that picture of course is
through what means do we get additional funding. We obviously
have to earn it, and in the research context I am pleased to say
that Cardiff is doing very well and earning money not just within
Wales but in the UK and world-wide. I think, however, that for
our teaching mission we have opportunities internationally. I
am convinced that there are more opportunities to recruit students
from overseas, but I am also of the opinion that we are under-investing
in the teaching activities in all universities. We are cross-subsidising
teaching in universities. Therefore, whether it is by means of
fees or whether it is an alternative method—and I cannot
predict what the Welsh Assembly will choose if the HE Bill goes
through—but by one means or another there has to be a greater
level of investment in teaching through universities in Wales.
Whether, because there are 13 institutions instead of a smaller
number, and whether that leads to inefficiencies, is a question
that I am not really able to give a precise answer on, but I would
suggest that that may be part of the problem here. As I know now,
from the merger of Cardiff and the College of Medicine, there
are undoubtedly economies of scale by bringing two institutions
together, and savings will be made. We are then able to invest
more in growing this new institution.
Q783 Mr Edwards: Dr Francis referred
to our experience when we were in Atlanta and being briefed about
the Georgia research alliance which was a very strong alliance
between the university sector, the state and private business,
which was putting considerable resources into higher education,
but much of it coming from the private sector. Do you think there
is more scope for the private sector to be able to invest in the
university sector here?
Dr Grant: I think so.
Q784 Mr Edwards: What will persuade
them to do so?
Dr Grant: The key to persuading
them is the quality of academics. As someone who in the past invested
in universities world-wide, I was always driven by the quality
of the people and the teams and the facilities they had. It is
a question in our case at present of looking towards having world-class,
in some cases world-leading academics; and they act as a magnet.
Other people want to work with them; other academics want to work
with them, industrialists and business people. People want to
work with the successful teams. In our own institution I am pleased
to say that we have got a number of people that I think are world-class,
and in one or two cases world-leading. That is the simple message.
If you have got the best people doing really exciting work, then
business will engage. It is a difficult generalisation, but we
do not do enough with blue-chip companies in Wales. As someone
who has invested from a big company perspective, I think there
should be more of those connections in Wales. I am well aware
that other institutions in England have blue-chip partners, and
we have very few connections; so that is an area that in my own
institution we will try to develop. Working with the big, major
international companies. We have one or two possibilities. I can
see pharmaceuticals being an area because of our focus now on
the biosciences. There have been one or two other examples like
that. Connecting with blue-chip companies helps. Then of course,
the supply chain, the SMEs, want to join in.
Mr Morgan: The key to unlocking
the opportunities with that will be funding. There is a role for
government funding and for venture capital funding. The thing
that unlocks it in America is the huge amount of venture capital
available in Silicon Valley for example, and the fact that Silicon
Valley venture capitalists are very closely involved with research
organisations in the universities. We do not seem to have that
venture capital available in Europe; we have more in the UK than
anywhere else, so we are not looking to Europe for a lead here
but, in Europe, because they do not have venture capital they
have been much more effective in using the public sector to lever
in the private sector. The Netherlands in particular has done
some fantastic work, bringing industry and universities together
by putting in some government funding to lever in these collaborative
joint venture partnerships. You mentioned the Gene Project Wales;
they have a genomics project in the Netherlands where they have
a huge amount of government funding as long as it is matched by
industry in developing this project. It is a case of getting the
funding in first or at least lever it in through the government
or get a lot more support in venture capital in the UK.
Q785 Dr Francis: Dr Grant, you mentioned
that you thought we had too many higher education institutions
in Wales currently. The logic of that argument is that perhaps
we ought to have one institution; and this again is not about
the University of Wales. There is an argument that economies of
scale dictate that perhaps we ought to have one national university
which is based in Cardiff.
Dr Grant: It would be irresponsible
of me to pick up too much on that theme at this point in time.
There is a lot of history to the University of Wales and the institutions
within Wales. They, and indeed we, all serve geographic needs
as well as hopefully an opportunity to draw together in order
to do collaborative work. I am insufficiently aware of the history
of collaboration across all institutions to create one, but I
would have thought that opportunities to link others together,
just as we have done with the College of Medicine, must be a possibility.
I certainly would not advocate having just one in Cardiff. I am
well aware of the geographic needs all around Wales.
Q786 Dr Francis: In the light of
our discussions this afternoon with you, do I take it from your
response now that a dialogue is going on between institutions
as a consequence of your departure from the University of Wales;
that there are still discussions going on about collaboration
for the future?
Dr Grant: Can I change, if you
do not mind, the terminology "departure from the University
of Wales"? This is a subject which is very dear to my heart.
We have changed our form of membership. We no longer are a constituent
institution in the University of Wales, but I have been very careful
in all the discussions with the University of Wales to maintain
an association as a linked institution. That has satisfied the
University in a university issue which drove us to this particular
point. You will recall that you cannot have a university in a
university. That is what has driven us to change the relationship
with the University of Wales, but we have not left the University
of Wales. It is not our intention to do so. We have got a new
relationship. I believe that for a future University of Wales,
you will find a number of different relationships according to
the maturity and the mission of the different institutions. In
other words, it becomes a confederal model rather than the present
federal university model. These are the issues that we are engaged
in at present, in discussion with the University of Wales.
Q787 Chairman: The idea of having
one university in Cardiff would not go down well with my constituents
in North Wales! I have a couple of short questions, mainly for
you, Dr Grant. Do you think that given the situation regarding
the relatively low R&D spending in Wales, both in the private
and public sector, that a coherent science policy such as they
have in some of the English regions, in the north-west particularly—that
if we tackled it in that way in Wales it would have a significant
effect on addressing this problem of low spend on R&D?
Dr Grant: It would help. What
I have seen in other regions, taking the north-west as an example,
is that they have such a strategy and I think it is beginning
to show results. I do think there is merit in having that. What
it would conclude, I would suggest to you, is that we are still
under-investing substantially in a number of growth areas. Even
in bioscience, which I am pleased to say we are increasing, is
still very small compared to other regions; and on a global scale
it is minuscule.
Q788 Chairman: As head of a prestigious
university and a former industrialist, what would be your ideas
on how to get the best technology transfer from academia to industry?
This is the problem we kept coming across, the use of technology.
Dr Grant: Technology really transfers
on a person-to-person basis; and therefore, as an institution,
we have to give the greatest number of opportunities for people
inside academia to talk with people in business and industry.
That is why the Innovation Network is successful. We take every
opportunity we can to connect. I am keen to engage with more blue-chip
companies, just as I am keen to encourage further SME collaboration
locally. However, we have very few academics. I just do not think
we have the capacity. We have got great academics, people like
Professor Pham who are brilliant at engaging with business; we
could do with 10 or twenty Phams in Wales. I will not comment
publicly about managerial issues but you could do with more people
like that. This is where we just do not have the mass of people.
If you could double the number of academics in 5 and 5* departments,
that would make a huge difference in spin-out, licence, attracting
investors into Wales. That is what has happened in Ireland, as
you are probably well aware. They spent £600 million. I would
do it for a lot less than that. Summarising the position, it is
a question of having more academics of high quality, and they
would act as a magnet within Wales.
Chairman: On that summation, thank you
very much for coming. It has been a very useful session, and we
have had a very interesting day.
|
